Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: March 12, 2008 - Volume 185

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Otherwise, welcome to this week’s issue of the Joe Ross Spread Trading Newsletter.

The Spread Scan weekly newsletter is designed to assist you in becoming a better, more complete trader by showing you, within the context of the markets, how to trade spreads.

In this newsletter you will see applications of spreading in the futures and commodity markets. Spreads are applicable to all futures markets including currencies, commodities, financial instruments, and stock indexes. It is even possible to trade spreads in the all-electronic intraday market using day trading techniques.

Spreads are based on seasonality, correlation, backwardation, chart patterns, and simple observation. Spreads follow the Law of Charts™ and can be implemented using the Traders Trick™ entry.

In each issue of Spread Scan, you will find an upcoming spread trade for your consideration in the following week. You will also find a review of an existing or closed spread so you can see and learn how spread trades are managed.

Spreads offer you the most efficient use of your margin account of any other way to trade. Many traders find they like them so much that spreading becomes their primary way of trading.

Each week we present spread trading examples and opportunities to help you become a more professional spread trader, and we provide you with helpful content of interest to traders:

Andy Jordan's Spread Scan Example:

This week we look at FCJ8 - FCK8: long April '08 Feeder Cattle and short May '08 Feeder Cattle

Today we consider a Feeder Cattle calendar spread: long April '08 Feeder Cattle and short May '08 Feeder Cattle (FCJ8 – FCK8). This spread has been in a long term downtrend since July of last year. We now get a very strong seasonal time window from about 02/29 until 04/07. Will seasonality help to move this spread in the other direction? The spread has good potential for some nice profits. The March ’08 low could be a good place for the initial stop.

Traders may want to enter the spread MOC today. Initial margin is $473. Suggested risk is $350. Initial projected objective is $350, then higher. Basis is seasonal (2/29 – 4/7) and a 1-2-3 low. Comment: The electronic FC market is not very liquid. I suggest taking the trade in the open outcry market.

Previous Trades:

Andy Jordan's Trading Bites

Student's Question: "Andy, is it dangerous to take trades in related markets at the same time?"

Andy: Yes and no! As long as you know the markets are related, and you know what can happen if something goes wrong, everything is fine. The problem comes if you don’t know about the relationship of your spreads. Very often the relationship is easy to see. For example, you are in FC-LC and now you see a new trading opportunity in FC-FC. It is obvious the spreads are related to each other. But what about W-W and C-C? Or even more difficult to see, the relationship between Feeder Cattle and Corn. Unfortunately, I am not able to give you a general answer. All you can do is to look at the charts. Find out how strongly they are related, and try to imagine what happens if one of the markets goes crazy. Example: Imagine you are in the spread A – B and you are thinking about entering X – Y. Now, all you have to do is to think about what will happen to X – Y if A falls like a rock. Or what will happen if B rises to the Moon. Do it for each contract of all of your spreads, and try to find out how it will affect all your open positions as well as the ones you would like to enter.

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A beginning Spread Trader, just starting out in learning to trade spreads.

An experienced Spread Trader who wants to take advantage of all the features and benefits that Traders Notebook™ offers daily, such as directing you to spreads you might want to trade.

A Day Trader who wants to trade Stock Indexes and Currencies using Futures Spreads.


You have subscribed to Joe Ross' Weekly Spread Scan Newsletter. If you have problems reading this newsletter, please follow this link: Spread Scan Issue: March 12, 2008 - Volume 185
This email was sent to you by Trading Educators. To ensure delivery to your inbox (rather than to bulk or junk folders) please add info@spread-trading.com to your address book immediately. To unsubscribe, scroll past the end of this newsletter and click the "unsubscribe" link. Otherwise, welcome to this week’s issue of the Joe Ross Spread Trading Newsletter. The Spread Scan weekly newsletter is designed to assist you in becoming a better, more complete trader by showing you, within the context of the markets, how to trade spreads. In this newsletter you will see applications of spreading in the futures and commodity markets. Spreads are applicable to all futures markets including currencies, commodities, financial instruments, and stock indexes. It is even possible to trade spreads in the all-electronic intraday market using day trading techniques. Spreads are based on seasonality, correlation, backwardation, chart patterns, and simple observation. Spreads follow the Law of Charts™ and can be implemented using the Traders Trick™ entry. In each issue of Spread Scan, you will find an upcoming spread trade for your consideration in the following week. You will also find a review of an existing or closed spread so you can see and learn how spread trades are managed. Spreads offer you the most efficient use of your margin account of any other way to trade. Many traders find they like them so much that spreading becomes their primary way of trading. Each week we present spread trading examples and opportunities to help you become a more professional spread trader, and we provide you with helpful content of interest to traders: Andy's Spread Trading Example Previous Trades Andy Jordan's Trading Bites More Spread & Position Trade Opportunities - too good to pass up Next Live Chats for Traders with Joe Ross Contact Us Be sure you receive all your issues of Spread Scan so that you can continue to enjoy learning through the best free educational trading information available, and so that we can keep you informed about additional educational services and products to help you grow as a successful and profitable spread trader.
Andy Jordan's Spread Scan Example: This week we look at FCJ8 - FCK8: long April '08 Feeder Cattle and short May '08 Feeder Cattle Today we consider a Feeder Cattle calendar spread: long April '08 Feeder Cattle and short May '08 Feeder Cattle (FCJ8 – FCK8). This spread has been in a long term downtrend since July of last year. We now get a very strong seasonal time window from about 02/29 until 04/07. Will seasonality help to move this spread in the other direction? The spread has good potential for some nice profits. The March ’08 low could be a good place for the initial stop. Traders may want to enter the spread MOC today. Initial margin is $473. Suggested risk is $350. Initial projected objective is $350, then higher. Basis is seasonal (2/29 – 4/7) and a 1-2-3 low. Comment: The electronic FC market is not very liquid. I suggest taking the trade in the open outcry market. back to top
Previous Trades: On January 28 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a metal spread 50SIH8 – 100GCG8 (elec.) at a spread value of -$8,600. Initial margin is $10,125 (no reduced margin). Suggested risk is $1,600. Initial projected objective is $1,600, then a move to -$5,000 or higher. Basis is seasonal (app. 1/22 – 3/18). Comment: You might possibly get a spread credit, but you'll have to check with your broker. FN for SIH8 is 02/29 and for GCG8 01/31." Here's how we suggested managing this trade: 01/29 Suggest entering MOC tomorrow, if not already in the trade. We have to roll from Feb. Gold into April Gold not later then 01/31. 01/30 In? Suggested stop at -$9,870. 01/31 Suggest moving stop to -$9,460. I personally would cash in some profits if possible today. 02/01 Spread hit first suggested target. Suggest moving stop to -$8,800. 02/04 Suggest moving stop to -$8,570. 02/05 Suggest moving stop to -$8,300. 02/08 Suggest moving stop to -$8,000. 02/11 Suggest moving stop to -$7,000. 02/11 Suggest moving stop to -$6,500. 02/13 Suggest moving stop to -$6,000. 02/15 Suggest moving stop to -$5,800. 02/25 Suggested stop on close at -$5,000. 02/26 Suggested stop on close at -$3,500. 02/27 Suggested stop on close at -$2,200. 02/28 Suggested stop on close at -$1,000. 02/29 The ones still in the spread should roll with the Silver contract from March into May on Monday 03/03. Gold will stay the same. Suggested stop on close at -$780 (with May Silver at -$255). 03/03 Suggested stop on close at $200. 03/04 Suggested stop on close at $300. 03/05 Suggested stop on close at $2,250. For more information about our daily newsletter, visit our Spread Website to find out more about Traders Notebook Questions or Comments? Please email us: support@spread-trading.com
Andy Jordan's Trading Bites Student's Question: "Andy, is it dangerous to take trades in related markets at the same time?" Andy: Yes and no! As long as you know the markets are related, and you know what can happen if something goes wrong, everything is fine. The problem comes if you don’t know about the relationship of your spreads. Very often the relationship is easy to see. For example, you are in FC-LC and now you see a new trading opportunity in FC-FC. It is obvious the spreads are related to each other. But what about W-W and C-C? Or even more difficult to see, the relationship between Feeder Cattle and Corn. Unfortunately, I am not able to give you a general answer. All you can do is to look at the charts. Find out how strongly they are related, and try to imagine what happens if one of the markets goes crazy. Example: Imagine you are in the spread A – B and you are thinking about entering X – Y. Now, all you have to do is to think about what will happen to X – Y if A falls like a rock. Or what will happen if B rises to the Moon. Do it for each contract of all of your spreads, and try to find out how it will affect all your open positions as well as the ones you would like to enter. back to top
SIGN UP for our Daily Spread & Position Trading Advisory Newsletter — Traders Notebook™ Good Trade Management Trade Consistency More Spread & Position Trade Opportunities — too good to pass up Traders Notebook™ is the premier spread and position trading newsletter, the only one of its kind, available to you as our loyal Spread Scan Subscriber. Choose your subscription term and try it out! *Traders Notebook™ is definitely for you if you are:* A Position Trader A Long-term Trader. A beginning Spread Trader, just starting out in learning to trade spreads. An experienced Spread Trader who wants to take advantage of all the features and benefits that Traders Notebook™ offers daily, such as directing you to spreads you might want to trade. A Day Trader who wants to trade Stock Indexes and Currencies using Futures Spreads. Traders Notebook™ lets you in on high probability futures position trades. These trades are hand-picked by Andy Jordan and Joe Ross. They are very carefully chosen for optimum results. Traders Notebook™ also directs you to all the spreads you might want to trade. Subscribers have daily access to online help and advice. Spreads are chosen by Andy Jordan, our Trading Educators' professional spread trader. We believe Andy is one of the best spread traders in the world! Follow this link for more details and sign up for our PREMIER Spread & Position Trading Advisory Newsletter to increase YOUR success and make YOUR trading a more rewarding trading experience. Try It and You'll See!
View last week's Spread Scan # 184 - March 05, 2008
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Next Chat: Wednesday, March 12, 2008 We hope you will join us! Here is where you login to Joe's Euro Chat You can also view our saved weekly Chat Logs in case you missed any Chats but want to be up-to-date.
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Disclaimer: The Commodity Futures Trading Commission has asked us to advise you that trading spreads or outright futures is complex and carries a high degree of risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders!

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